"Fortnum & Mason aims to cut basic pay for more staff in bid to reduce tax bill", 15 December 2016

...Fortnum & Mason is trying to persuade more of its staff to accept a big cut in basic pay in return for a share of tips in a move that will help reduce its tax bill.

The retailer...currently does not share with staff any of the 12.5% service charge automatically added to bills paid by drinkers at its Heathrow bar.

Fortnum’s is now consulting with the 20 bar staff on introducing a so-called “tronc” system under which the charge would be shared out among them – but only if they agree to take a cut in basic pay. The plans prompted protests...outside Fortnum’s flagship store in London...

An illustration of the changes ...indicates they would receive a near 11% cut in basic pay, taking them down to the national minimum wage of £7.20 an hour, which would then be replaced by a minimum share from the service charge.

...the letter does not make clear what proportion of the total service charge paid voluntarily by customers would be allotted to the workers...It also makes clear that the illustrated payments are not guaranteed.

The letter points out that under the new system the employees would be liable for lower national insurance payments...But the changes would also mean a cut in the tax bill in employer’s national insurance for Fortnum & Mason...

The same changes were made to nearly all the 250 staff working at Fortnum & Mason’s restaurants, cafe and bar in London last year.

Unite...said the new system was “shrouded in secrecy” and staff who signed up would be swapping guaranteed pay for an unknown amount of tips...

A spokesman for Fortnum & Mason said: “In July 2015, we consulted with staff and implemented a new, dynamic and fair tronc system. Nothing was imposed: staff were given a proposal to consider on an individual basis, and of our 250 hospitality staff, only one opted out, who remains with the company. The devising and administration of a tronc system is by its very nature complicated, and to ensure operation within both the letter and spirit of the law, Fortnum’s engaged a respected independent company, WMT Troncmaster Services, who continue to manage the arrangements.

“Since the new tronc system, which is in line with industry standards, came into being, Fortnum’s has not had a single complaint from staff.

“The 20 hospitality staff at the company’s outlet at Heathrow T5 were not included in the 2015 consultation because it was a new site without an established trading record..."